October 15, 2012

Afghan Mining Minister Presses Ahead with Reforms to Improve Transparency

On Sunday, Afghanistan’s Mining Minister Wahidullah Shahrani took steps to improve transparency in the country’s extractive resources industry by disclosing roughly 200 mining contracts that had previously been kept secret.

According to The New York Times, the move is “likely to please his supporters in the West, including the United States, who made greater openness in the Afghan government’s financial dealings a condition of billions of dollars in development assistance and aid money pledged earlier this year.”

Just two years ago, Afghanistan’s mineral wealth – estimated to be worth potentially a trillion dollars –promised hope to a torpid economy plagued by generations of war. “The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world,” The New York Times reported in June 2010.

But corruption and a lack of transparency has plagued the country’s mining industry. Reports say that there are ongoing disputes within the government over contracts to Afghans with ties to the Karzai family, including accusations that the government is steering lucrative deals to companies with ties to the Karzai family to develop the countries oil and natural gas reserves. Last month, The New York Times claimed that the country’s mineral sector had been “increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government’s vulnerabilities on display,” and may even be helping fund Afghan insurgents.  “A recent Defense Department analysis said criminal mining syndicates were smuggling chromite over the border, paying protection money to the Pakistani Taliban and the Haqqani insurgent network,” The New York Times reported.  

While Shahrani’s efforts to make previous mining contracts public is a notable effort to improve transparency, his other effort to pass a law requiring that all contracts be made public has fallen short and exposed his political weakness. According to The New York Times, “Some Western officials fear the maneuvering reflects attempts by political rivals to snatch control of the Mining Ministry, a coveted post that oversees millions of dollars in contracts.” Sunday’s disclosure may be an effort by Minister Shahrani to neutralize the ongoing political maneuvering.

Nevertheless, the Afghan government has yet to fully institutionalize some of the best practices needed to transform its mining industry. Much of the effort is indeed individually driven by officials like Shahrani who remain politically weak. And it is increasingly clear that the country cannot afford to rely on individuals alone to transform the mining sector. To reap the full benefits of the country’s mineral wealth, the Afghan government will need to make some changes in how it forms contracts with domestic and foreign companies. A good place to start would be by working together to pass a law requiring public disclosure of those contracts. 

Photo: Afghan Mining Minister Shahrani visited the State Department in March 2012. From left to right: Assistant Secretary for South and Central Asia, Robert O. Blake, Jr.; Afghan Minister of Mines, Wahidullah Shahrani; Afghan Ambassador to the U.S., Eklil Hakimi; U.S. Special Representative for Afghanistan and Pakistan, Marc Grossman. Courtesy of Joseph Witters and the U.S. State Department.